Medicaid Drug Fraud: Drug Diversion Schemes And Pill Mills

A pill millÓ operates when physicians, clinic owners, & pharmacists collect to defraud Medicaid by prescribing & distributing drugs mainly to obtain reimbursement. Patients are often knowing participants in these schemes, allowing use of their Medicaid recipient numbers for billing purposes in exchange for cash, drugs, or other inducements. This report assesses the extent of the drug diversion problem, the reasons it persists, & what actions are being taken to bring it under control. Charts & tables.

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Page 42 - In the final analysis, the commitment and institutional support of the secretary of the Department of Health and Human Services, the Office of Management and Budget, and the Congress are all essential to the successful implementation of a departmental comprehensive integrated health care statistics strategy.

Page 2 - For example, some pharmacists routinely added medications to customers' orders, keeping the extras for themselves or to sell to others. Clinics inappropriately provided Medicaid recipients with completed prescription forms (scrips) that were then traded for merchandise from local pharmacies or sold on the street to the highest bidder. Some pills costing 50 cents at the pharmacy were resold for as much as $85.

Page 3 - The drug fraud took many forms, including pharmacists who routinely added medications to customers' orders, keeping the extras for themselves or to sell to others; clinics that inappropriately provided Medicaid recipients with completed prescription forms (scrips) that were then traded for merchandise from local pharmacies or sold on the street to the highest bidder; and typical pill mill schemes in which recipients, in exchange for abusable drugs, allowed physicians, pharmacies, and labs to use...

Page 35 - Under the act controlled substances (narcotics and dangerous drugs) have been divided into five schedules on the basis of their potential for abuse, accepted medical use, and accepted safety under medical supervision. Substances included in schedule I are those with a high potential for abuse, no accepted medical use, and a lack of accepted safety. Those in schedules II through V decrease in potential for abuse and increase in accepted medical use. The placement of a drug in any one of these schedules...

Page 1 - Medicaid, the largest government health program for the poor, is a logical target of drug diversion because it typically includes prescription drugs in its covered services. It accounts for 80 percent of all federal spending on prescription drugs. In 1991, prescription drugs accounted for 7 percent of Medicaid spending — more than physicians' services, more than any noninstitutional benefit provided by the program.

Page 1 - In Florida and Texas, the recent rate of increase has been even greater, with expenditures more than doubling between 1987 and 1991.' The incentive to abuse the Medicaid drug benefit is considerable: some prescription drugs have psychological or physical effects similar to those of illicit drugs; others have substantial monetary value, and profiteers can divert them for resale through illicit channels. The pursuit of drug diversion...